The Chinese government is ratcheting up incentives for the domestic solar market in a big way at the state and federal level in order to absorb some of the world's excess solar panel capacity.
China's PV manufacturing facilities are vastly underutilized. A few Chinese firms might be allowed to fail by the government or encouraged to be acquired by larger, more stable entities. Suntech, LDK, and others are faced with mounting balance sheet issues.
The U.S. and the European Union are imposing tariffs on Chinese solar products, the incentive regimes in Germany and California are diminishing, and China is facing some fierce market realities.
Perhaps the domestic Chinese market can let off some of this steam.
Forecasts on 2012 China PV numbers range from 3 to 8 gigawatts. (The U.S. PV market is forecast at 3.2 gigawatts according to GTM's U.S. Solar Market Insight report.)
GTM Research has China at 5.5 gigawatts in 2012, with installations predicted to hit 30 gigawatts cumulative by 2015. Suntech's estimate is four to five gigawatts this year. Carsten Körnig, Managing Director of the German Solar Industry Association, has the China solar market at four gigawatts in 2012.
Yingli's CEO said China would account for 30 percent of its revenue in 2012. Suntech expects China to account for about 10 percent of its total shipments in 2012, or 200 to 250 megawatts, and sees China as "the world’s largest PV market in the next two or three years." According to Shi Lishan, deputy director of the Chinese administration’s renewable energy division, quoted in an article in Bloomberg, China is quadrupling its domestic solar installation goal to 21 gigawatts by 2015.
Frank Haugwitz, Head of Intersolar Conference Development, presented earlier this month on domestic Chinese solar demand and he quoted some large numbers. According to Haugwitz, China is aiming for "50 gigawatts by 2020, although 100 gigawatts is not out of the question."
Haugwitz gave an example of the impact of just one province with strong provincial policy. Qinghai province has five million inhabitants and is twice Germany's size, with ideal topography for ground-mounted solar at a high elevation and DNI. 2012 installations are estimated at 1.4 gigawatts.
China's existing RPS mandates call for local power utilities to get 8 percent of their power generation capacity from non-hydro renewable energy sources by 2020. China's National Grid places a power surcharge on all users of RMB .008 per kilowatt-hour and increased that charge by 100 percent in December of last year with this funding stream to be channeled toward renewables.
Global overcapacity is not going away anytime soon, but a healthy high-growth Chinese domestic market could ease some of the pain. Whether American or European countries can play in the Chinese market is another question.
While we're on the topic of Tier One solar manufacturers in turmoil, Barclays just issued a note saying:
Canadian Solar lowered its 2Q solar module shipment outlook to 410-420MW from its previous guidance of 430-450MW due to weaker than anticipated demand in the United States. Canadian Solar also updated its gross margin guidance to a range of 12%-12.5%, a notable uptick from its prior guidance of 8%-10%, although primarily due to a positive one-time impact of approximately 4%.
Trina Solar, on the other hand, lowered its 2Q module shipment outlook yesterday to 390-420MW from its initial guidance of 500-520MW, citing stagnant U.S. demand and push-outs of several large projects in China. It also revised its gross margin guidance to a range of 7-9% compared to prior guidance of approximately 10%, mainly due to pricing pressure likely coupled with lower shipments.
Shyam Mehta made these observations and forecasts for the global PV market in GTM Research's most recent solar market report:
- PV supply to be nearly 200 percent of demand in 2012, or 59 gigawatts of supply compared to 30 gigawatts of demand
- Crystalline silicon (c-Si) module manufacturing costs to fall as low as $0.45 per watt by 2015 for Chinese Tier-1 suppliers
- C-Si module average selling price (ASP) to dip to $0.61 per watt by 2015 from Chinese Tier-1 suppliers
- Average c-Si module efficiency to hit 16.4 percent by 2015 compared to 14.9 percent today